Funko Reports First Quarter 2021 Sales of $189 Million, Up 38%; Raises Full Year Outlook

Rhea-AI Summary

Funko (Nasdaq: FNKO) reported strong financial results for Q1 2021, with net sales rising 38% to $189.2 million, driven by significant demand in the U.S. and Europe. Gross margin expanded to 41.4%, and net income increased to $11.1 million. Adjusted EBITDA rose to $29.8 million, with a margin of 15.7%. Direct-to-consumer sales soared over 160%, and the acquisition of a majority stake in TokenWave marks a strategic entry into the NFT market. Funko aims for continued growth, projecting 33% to 38% topline growth for 2021.

Positive

• Net sales increased 38% to $189.2 million.
• Gross margin expanded 100 basis points to 41.4%.
• Net income rose to $11.1 million, a $16.8 million increase.
• Adjusted EBITDA increased $19.2 million to $29.8 million.
• Direct-to-consumer sales surged over 160%.
• Acquired majority stake in TokenWave for NFT market entry.

Negative

• None.

Funko, Inc. ("Funko,” or the “Company”) (Nasdaq: FNKO), a leading pop culture consumer products company, today reported its consolidated financial results for the first quarter ended March 31, 2021.

First Quarter 2021 Financial Highlights

• Net sales increased 38% to $189.2 million
• Gross margin¹ expanded 100 basis points to 41.4%
• SG&A expenses increased 8% to $51.3 million; as a percent of net sales, SG&A declined 750 basis points to 27.1%
• Net income increased $16.8 million to $11.1 million
• Net income margin expanded 1,000 basis points to 5.9%
• Adjusted EBITDA² increased $19.2 million to $29.8 million
• Adjusted EBITDA margin² expanded 790 basis points to 15.7%
• Cash flow from operations of $37.5 million
• Total liquidity³ increased 47% to $149.7 million

First Quarter 2021 Operating Highlights

• U.S. net sales increased 39% to $136.5 million and Europe net sales increased 55% to $39.8 million, reflecting a strong demand recovery in both regions
• Pop! branded products grew 33% as our broad license portfolio continues to enable our fans to connect with their favorite pop culture icons
• Net sales of Other (non-figure) products increased 52%, led by Loungefly branded products which grew 82% in the quarter, as well as strength in games, plush and accessories
• Direct-to-consumer sales increased more than 160% driven by continued strong demand on the Company’s Funko and Loungefly e-commerce sites
• 66% of sales were attributable to evergreen content
• Completed the acquisition of a majority stake in TokenWave, providing the Company with strategic entry into the NFT market

“Improving consumer demand in the U.S. and Europe contributed to broad-based strength within our brands, products and distribution channels, leading to a record first quarter,” said Brian Mariotti, Chief Executive Officer. “Throughout the pandemic, our teams have maintained a relentless focus on delivering innovation and engaging with our fans around the world, positioning the business to drive topline growth as the demand environment strengthens. In the first quarter, this enabled us to achieve sales growth of 38%, strong Adjusted EBITDA margins² and a substantial increase on the bottom line.”

“We are confident that our innovation pipeline, strategic focus and experienced teams will enable us to deliver continued growth and expansion in the dynamic macro environment,” continued Mariotti. “We’re investing behind our key strategic priorities and expect to achieve topline growth of 33% to 38% in 2021, above our previously stated range, while also driving increased profitability.”

First Quarter 2021 Financial Results

Net sales increased 38% to $189.2 million in the first quarter of 2021 compared to $136.7 million in the first quarter of 2020. The year-over-year increase reflects broad-based strength across geographies, products and channels.

In the first quarter of 2021, the number of active properties increased 12% to 762 from 681 in the first quarter of 2020 and net sales per active property increased 24%.

On a geographical basis, net sales in the United States increased 39% to $136.5 million and net sales in Europe increased 55% to $39.8 million. Net sales in other international regions increased 2% to $12.9 million, as several countries continue to experience disruptions from COVID-19.

On a product category basis, net sales of Figures grew 35% to $150.6 million, reflecting strength in the U.S. and Europe, as well as the Company’s Funko and Loungefly e-commerce sites. Net sales of Other (non-figure) products increased 52% to $38.5 million, reflecting strength in Loungefly branded products as well as double-digit growth in games, accessories, and plush.

On a brand basis, Pop! branded products grew 33% to $150.3 million, reflecting strong growth in the U.S. and Europe. Loungefly branded products grew 82% to $24.5 million. Both brands generated strong demand in the U.S. and Europe, as well as strength across our direct-to-consumer channels. Net sales of other branded products increased 41% to $14.3 million driven by board games, plush and action figures.

The tables below show the breakdown of net sales on a geographical, product category and branded product basis (in thousands):

	Three Months Ended March 31,						Period Over Period Change
	2021			2020			Dollar

FAQ

What were Funko's financial results for Q1 2021?

Funko reported net sales of $189.2 million in Q1 2021, a 38% increase compared to the prior year.

What was the net income for Funko in Q1 2021?

Funko's net income for Q1 2021 was $11.1 million, increasing by $16.8 million from the previous year.

How much did Funko's adjusted EBITDA grow in Q1 2021?

Adjusted EBITDA rose by $19.2 million to $29.8 million in Q1 2021.

What strategic action did Funko take regarding NFTs?

Funko completed the acquisition of a majority stake in TokenWave, allowing entry into the NFT market.

What financial projections did Funko provide for 2021?

Funko expects topline growth of 33% to 38% in 2021.